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Capstone Partners Advises Wachs Water Services on its Acquisition by Pure Technologies

Mergers & Acquisitions

April 2015

Chicago, IL – Capstone Partners LLC, a leading investment banking firm, announced that it has successfully advised Wachs Valve and Hydrant Services, LLC ("Wachs Water Services") on its acquisition by Pure Technologies Ltd. Capstone Partners acted as financial advisor to Wachs Water Services.

Headquartered in Buffalo Grove, Illinois, Wachs Water Services is a leading provider of flow control maintenance and support, leak detection and related asset management services to the water sector in the United States. Wachs Water's roots reach back 132 years; the company was formed from the E.H. Wachs Company, which was founded in 1883. Wachs Water Services was founded in 2000, as a service company focused on helping water utilities to improve control of their aging distribution networks.

Headquartered in Calgary, Alberta, Canada, Pure Technologies Ltd. is an international asset management, technology and services company which has developed patented technologies for inspection, monitoring and management of critical infrastructure around the world.

The total purchase price was $18.5 million, consisting of $13.5 million in cash and $5.0 million in common shares of Pure stock to be issued over the 18-months following the closing. For the trailing 12 months ended September 30, 2014, Wachs Water generated revenue of $18.7 million with an estimated order book of $13.6 million. Adjusted EBITDA was $3.0 million during the period, up from $2.3 million generated during the 12 months ended December 31, 2012, and representing a compound annual growth rate of 16% over this period. Over this same timeframe, adjusted EBITDA margins increased from 12% to 16%.

"We are delighted with the opportunity to add Wachs Water to the Pure team," said Jack Elliott, President and CEO of Pure. "This important acquisition further diversifies Pure's business in the U.S. water sector, broadens our client base especially in the small and medium-sized utility space, and provides us with complementary revenue streams in related pipeline management activities. It also brings to Pure significant management capability, and enhanced business development and field services resources. Wachs Water's experienced management team, led by Cliff Wilson, President, will complement our own and will be instrumental in increasing operational efficiency and managing growth in our North American business. The acquisition is consistent with our stated strategy of selectively adding expanded distribution channels for our suite of proprietary inspection and condition assessment technologies."

"With Wachs Water, our combined services and expertise encompass the length of the underground infrastructure value chain, further positioning us as the leader in our space," commented Michael Higgins, Pure's Senior Vice President for the Americas region. "Wachs Water's expertise in pipeline valve, hydrant and distribution systems management greatly expands our overall offering. Our respective water utility clients will benefit from an enhanced and integrated solution set which includes Pure's proprietary inspection and monitoring technologies. Together, we now have the capability to fully manage pipeline condition assessment projects, from valve management to pipeline re-commissioning."

"We are excited to join the Pure team," said Cliff Wilson, co-founder and President of Wachs Water. "Together, we will be in a unique position to help utilities solve underlying and fundamental underground aging infrastructure challenges. I see this as a tremendous fit that delivers opportunities to better serve our clients while also providing additional opportunities for our team members. I look forward to a bright future."

Commenting on Capstone Partners’ latest transaction in the infrastructure sector, Ted Polk, Managing Director of Capstone, added, “We are proud to have represented the Wachs family for a second time in the sale of one of their businesses. With its inherent synergies, this transaction should greatly benefit both Wachs Water and Pure Technologies. The transaction is representative of the highly strategic and selective acquisitions we are seeing in this space. Buyers are methodically building their product and service offerings so as to be best prepared to win their share of available work. The competition for projects is tight, causing buyers to move across the spectrum of products and services in an effort to build a compelling and encompassing offering.”